With $54.3 billion deficit, cuts ahead

Good morning, California. It’s Friday, May 8.

Unemployment could spike to 18%

The Sir Francis Drake Hotel in San Francisco's Union Square boarded up on Tuesday, March 24, 2020.
The Sir Francis Drake Hotel in San Francisco’s Union Square boarded up on March 24. Photo by Karl Mondon, Bay Area News Group

Fifty-four point three billion dollars.

That’s the size of California’s budget deficit due to the coronavirus pandemic, according to figures released Thursday by the state Department of Finance — a number higher than the state’s deficit during the Great Recession and a shocking contrast to the $6 billion budget surplus Gov. Gavin Newsom projected in January.

California’s unemployment rate is also projected to skyrocket to 18%.

The massive budget shortfall presages big cuts to schools, health care and safety-net programs. For example, California’s public school system, including community colleges, will lose $18 billion in the state’s minimum funding guarantee. For more, check out CalMatters’ comprehensive look at how the deficit will impact the state’s major programs.

  • Newsom on Thursday: “We’ll get through it by working together. … But my optimism is conditional on this: more federal support. … It is absolutely incumbent upon our federal partners to recognize … the magnitude of this moment and how it’s directly related to COVID-19, not mismanagement. … This is, again, not a red state issue, not a blue state issue. It’s tiring saying that.”

The comment was a veiled allusion to U.S. Senate Majority Leader Mitch McConnell’s aversion to providing additional federal aid to state and local governments for fear they would use it to pay off pension debt. Last month, McConnell’s office referred to the idea as “blue state bailouts.”

With the prospect of federal aid uncertain, California facing a massive budget shortfall and taxpayers in an especially tax-averse mood, it’s unclear how cities and counties will plug their own budget holes, CalMatters’ Ben Christopher reports.

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The Bottom Line: As of 7 p.m. Thursday night, California had 62,111 confirmed coronavirus cases and 2,532 deaths from the virus, according to a Los Angeles Times tracker. (These numbers are different from those of the state Department of Public Health, which are updated less often.)

Also: CalMatters regularly updates this pandemic timeline tracking the state’s daily actions. And we have an explainer for everything you need to know about California’s response to coronavirus.

Other stories you should know

1. Retail, manufacturing and logistics can reopen today; strict standards for regional variation

Gov. Gavin Newsom, right, talks with Roshaun Davis, owner of Display California, in Sacramento on May 5. Davis plans to open his store for curbside service on Friday. AP Photo/Rich Pedroncelli, Pool

Today, California will officially modify its stay-at-home order after seven weeks of sheltering in place. Eligible to reopen: retail stores with curbside pickup and manufacturing and logistics chains, with the appropriate precautions. Expect masked and gloved delivery workers, contactless payment systems and lots and lots of hand sanitizer.

Newsom emphasized there is room for regional variation and counties can move faster than the state by reopening restaurants and offices. But they first have to meet pretty stringent requirements, as certified by the local public health officer and supported by the county Board of Supervisors and local hospitals and health care systems.

The requirements include:

  • No more than one COVID-19 case per 10,000 residents and no COVID-19 deaths in past 14 days.
  • Minimum daily testing volume of 1.5 per 1,000 residents.
  • Testing availability for at least 75% of residents.
  • 15 contact tracers per 100,000 residents in counties with no cases.
  • Ability to temporarily house 15% of homeless residents.
  • County/regional hospital capacity for a 35% patient surge.

2. CA lawmakers to probe Blue Flame deal that fizzled out

An N95 medical mask. Image via iStock

Lawmakers plan to hold a hearing this month to investigate California’s decision to wire $456.9 million to Blue Flame Medical LLC, a three-day-old medical-supply company, before canceling the transaction hours later — and to examine the state’s vetting process amid the pandemic, CalMatters’ Laurel Rosenhall reports. Republican legislators are also seeking an audit of all the state’s spending on protective masks, including the failed Blue Flame deal and the $1 billion contract California subsequently signed with Chinese company BYD.

  • Nine GOP legislators in a Thursday letter to the Legislature’s Democratic leaders: “We are concerned about the details of a rushed, half-billion contract to a company only days old and a price-per-mask contract with BYD that could be nearly 40% higher than what is available on the market. Rather than learning of these issues from the Administration … we are getting delayed and incomplete reports from news stories.”

3. CA community college students get emergency aid, but not from feds

A student walks back to her car after picking up eggs, milk, produce and dried goods from the weekly drive-thru food pantry at Santa Monica College. Photo by Mikhail Zinshteyn for CalMatters
A student walks to her car after picking up eggs, milk, produce and dried goods from the weekly drive-thru food pantry at Santa Monica College. Photo by Mikhail Zinshteyn for CalMatters

California community college foundations are stepping up to provide emergency financial aid to students amid the pandemic, and many are prioritizing those ineligible for direct relief from the federal government, including undocumented and international students, CalMatters’ Mikhail Zinshteyn reports. The foundations are helping finance food pantries, meal delivery, laptop distribution and emergency rent grants. But community colleges, which already have fewer resources than other schools, were also shortchanged in the federal relief package due to their high percentage of part-time students, receiving roughly a third of California’s higher ed funds despite enrolling nearly 60% of its college students.

  • Debbie Cochrane of the Institute for College Access & Success: The federal funding formula “absolutely disadvantaged community colleges where significant shares of students are part time. For community college students, it really adds insult to injury.”

4. COVID-19 patients in hospitals and intensive care units, by county

Curious how the number of confirmed and suspected California COVID-19 patients hospitalized and in intensive care units is changing over time? CalMatters data journalist Lo Bénichou has added new visualizations to our popular tracker, created by senior web developer John Osborn D’Agostino, to include those numbers for each and every county. Check it out.

CalMatters commentary

Courage is key: Donald Trump often boasts that he is a “wartime” president. Those of us who served in war wish that were true. Successful wartime leaders have one thing in common — courage, write Robin Umberg, retired U.S. Army Brigadier General, and Democratic state Sen. Thomas Umberg of Santa Ana, a retired U.S. Army Colonel.

Covering protests responsibly: When covering protests of California’s stay-at-home order, journalists should keep these four lessons in mind, argue Richard M. Carpiano, a professor of public policy and sociology at UC Riverside, and Dorit Rubinstein-Reiss, a Hastings law professor.

Age is but a number: Millions of older Californians are making their mark every day during the COVID-19 pandemic, contributing to the state’s vitality and sense of community, writes Kim McCoy Wade, director of the California Department of Aging.

Other things worth your time

New state website allows Californians to find coronavirus tests near them. // The San Francisco Chronicle

California’s unemployment website is confusing, jobless say. // The Sacramento Bee

California restaurants envision big changes in reopening. // The Associated Press

Two counties defied Newsom and reopened. Now California warns restaurants could lose their licenses if they open too early. // The Los Angeles Times

Barbers and beauticians plan to sue Newsom over the shelter-in-place order. // Politico

The highest support for the shelter-in-place order comes from the Bay Area. // The San Francisco Chronicle

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See you Monday.

Tips, insight, or feedback? Email [email protected].

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